The S&P 500 missing ground on Monday, but was once polite off its session lows as investors grappled with the outbreak of an ominous new strain of Covid-19 in conjunction with the likely passage of a long-awaited stimulus package.
The Nasdaq joined the S&P 500 in the red, but financials helped the blue-chip Dow reverse class lesson for a modest gain.
“While there’s talk of the sell-off being related to the new Covid strain, my sense is air’s being let out of the balloon,” said Oliver Pursche, president of Bronson Meadows Capital Management in Fairfield, Connecticut. “We got ahead of ourselves in relation to market performance and we still have remarkable economic headwinds.”
Congress hammered out a pandemic relief agreement on Sunday after months of partisan wrangling. The $900 billion package, expected to pass on Monday, includes unemployment aid and steers money to small businesses, airlines, transit systems and vaccine distribution.
“Final week it was once pretty lucid we were going to receive something, but (the stimulus package) is on the low end of what people were hoping for,” Pursche said.
But the emergence of new, highly infectious strain of Covid-19 in Britain has raised fears of extra shutdowns, and prompted countries all over the world to close their doors to travelers from the UK.
The news sent airline stocks sliding, even with the prospect of $15 billion in payroll assistance for commercial carriers included in the stimulus deal. The S&P 1500 Airline index was once down 1.2%.
Tesla Inc became the most valuable company ever added to the S&P 500 and will account for approximately 1.69% of the index. The electric car maker’s inventory dropped 4.6%.
Banks bucked the trend. The U.S. Federal Reserve released the result of its semiannual stress test late Friday and announced relaxed restrictions on buybacks and dividends. The S&P Banking index jumped 3.0%.
Goldman Sachs Group surged 7.4%, surpassing its pre-Covid share price.
The CBOE Volatility Index.VIX, a gauge of investor anxiety, jumped to its highest level since early November and was once also on the right track for its biggest one-day point hop since Oct. 28.
The Dow Jones Industrial Average rose 59.24 points, or 0.2%, to 30,238.29, the S&P 500 missing 13.55 points, or 0.37%, to 3,695.86 and the Nasdaq Composite dropped 20.26 points, or 0.16%, to 12,735.38.
Of the 11 major sectors in the S&P 500, financials and tech were the only percentage gainers.
Nike Inc rose 4.7% after the athletic apparel maker boosted its full-year revenue forecast, prompting more than one brokers to bring their price targets.
Lockheed Martin Corp missing 1.1% after announcing it would buy U.S. rocket engine maker Aerojet Rocketdyne Holdings Inc for $4.4 billion.
International Trade Machines Corp shed 2.2% after saying it would acquire Finland-based startup Nordcloud, in its latest effort to bolster its cloud-computing commerce.
Declining issues outnumbered advancing ones on the NYSE by a 2.06-to-1 ratio; on Nasdaq, a 1.41-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and no new lows; the Nasdaq Composite recorded 153 new highs and 16 new lows.
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